Roseman's Eruptions

British Pound World’s Most Overvalued Currency

In my view, no other global currency is as flagrantly overvalued as the British pound. Despite a rapidly deflating real estate market in London, including most commercial properties, consumer confidence at an 18-year low and tepid export growth, the pound remains relatively strong against the dollar.

Since the dollar began its multi-year bear market in 2002, the pound has barely corrected. Though sterling has declined against the euro, it remains expensive versus the dollar.

Dogs of the World Hammered by Banks and Telecoms

The Dogs of the World Portfolio will probably post a loss as we quickly approach June 30th. Dogged by contrarian bets on banking and telecommunication stocks, the portfolio has been whipsawed the first six months of this year.

The strategy -- predicated on isolating the top ten highest yielding large caps in the world on December 31st, has declined a cumulative 6.5% this year, including dividends. This compares to a loss of 6.3% for the MSCI World Index over the same period.

To be sure, 2008 is an exceptional year to be a contrarian investor.

Debunking False Assertions: Why Most Commodities are Not in a “Bubble”

Over the last several weeks, government agencies and securities regulators have been pouncing on speculators and index fund service providers as they seek to point the blame on booming commodity price inflation. Even legendary hedge fund investor, George Soros, has recently testified in Washington blaming the proliferation of index funds for the rapid increase in commodity prices.

Don’t Trust this Rally Until Economic Signals Improve

Is the stock market correct about the economy? Yesterday’s big rally suggests the American economy is resilient as Wal-Mart (NYSE-WMT) surprised analysts with a strong retail sales figure. Also confirming the primary trend of the market since late March is the Dow Jones Transportation Average – sitting at an all-time high this morning and up an impressive 20% this year.

Asian Currencies Offer Best Value amid Dollar Rally

The U.S. dollar continues to muster a bear market rally this spring with big gains overnight in Europe, Asia and the Americas. But as this rally eventually runs out of gas, look to the Asian currencies as the best long-term value as the revaluation theme accelerates.

The Unorthodox Fed

Something unusual is happening at the Fed…

Ben Bernanke, FOMC Chairman, boosted the value of the U.S. dollar yesterday in a rare public admission of tacit dollar support. This marks the first time since the Bush Administration came into office in 2001 that the Fed has publicly supported a “strong dollar” policy.

Fed in No Hurry to Raise Rates – Even Amid Rising Inflation

The futures markets are starting to discount an interest rate hike by the Federal Reserve in October. Bond yields have risen sharply off their four-year lows in mid-March, core inflation is strengthening and the broadest gauge of money supply, the expansion of credit, is running at a dizzy 16% annualized rate. This data suggests the Fed is way behind the inflation curve and will start raising lending rates this fall.

Canadian Economy, amid Commodity Boom, not Immune to Global Banking Crisis and U.S. Slowdown

Compared to the losses recorded by many American and European banks, the Canadian financial services sector has weathered the subprime crisis with far less pain. But if the oil boom fades and structured investment product losses continue to mount, Canada might face a serious economic slowdown.

As Credit Crisis Continues to Thaw, Risks Remain

So far, the Fed’s magic is working as subprime leaves prime time…

The Federal Reserve and other global central banks have successfully tempered the credit crisis since mid-March. The Fed’s effective bailout of now defunct Bear Stearns created a floor under the subprime wreckage. The good news is that a host of high-risk credit indices have posted big rallies over the last eight weeks, including a blizzard of new fixed income issues hitting the markets as companies return en masse to fund their operations.

Britain’s Version of Peter Lynch Cautious on World Markets

I’ve followed Fidelity’s Anthony Bolton’s career for many years. I’d say he’s the closest thing to America’s Peter Lynch, the famous manager of the Fidelity Magellan Fund, earning 29% per annum during his 13-year tenure. Unlike Lynch, however, Bolton is a global investor and doesn’t like what he sees in world markets at the moment.

The former manager of the British based Fidelity Special Situations Fund, a value-contrarian fund, remains cautious on global markets, especially banking shares and the mining sector.